Roth IRA and SIMPLE IRA Contributions
I, currently, am contributing to a Roth IRA. Also, I want to begin a SIMPLE IRA for the business that I own. My wife and I are the only employees. Can I start a SIMPLE IRA this year and can i contribute to a Roth IRA and my SIMPLE IRA? If so, what are my limits?
Permalink Submitted by Alan Spross on Fri, 2012-07-06 23:28
If you did not have a SIMPLE IRA before, you must establish the plan prior to Oct 1 if your business is established prior to that date.
You can still both contribute to Roth IRAs as well, providing that your joint modified AGI is not over the 173k to 183k phaseout range. You must also have enough earned income (includes net earnings from self employment) to cover your Roth contributions, for which the max is 5k each plus another 1k for each spouse that has reached age 50 by the end of 2012. Your spouse can make a spousal contribution using your income if need be. Note that your net earnings from SE is the figure PRIOR to subtracting the SIMPLE IRA contribution, meaning that you could use the same net earnings to fund both the SIMPLE IRA contribution and the Roth IRA contribution.
Remember that there is a 2 year waiting period before you can roll funds out of your SIMPLE IRA, measured from the date of your first SIMPLE IRA contribution.
Finally, if you contribute to a 401k from another job, it can reduce the max SIMPLE IRA contribution you are eligible to make.